Posted
by
samzenpus
on Sunday November 11, 2012 @06:50PM
from the holding-the-wealth dept.

Hugh Pickens writes "With the 'fiscal cliff' just weeks away, Chris O'Brien writes that venture capital fundraising in silicon valley is down, the amount invested is down, the number of folks investing in venture capital is down, and the number of VC firms and partners are down. 'The people I talked to in the industry sounded grim even as they tried to make the case for optimism,' writes O'Brien. 'Still, it remains difficult to identify a clear path for turning things around for the battered venture capitalists who make Silicon Valley hum.' So what's wrong with the VC industry? The problems are many and complex but they can be boiled down to one thing: Not enough exits. For the size of venture capital being raised and invested, there simply aren't enough initial public offerings of stock or mergers and acquisitions to generate the returns that funds need. Venture insiders blame the global economic uncertainty. They believe that is part of the reason that giant corporations, which have amassed huge piles of cash, are just sitting on it, rather then using it to acquire startups. 'The numbers are way down,' said Ray Rothrock, a partner at Venrock. 'All these companies with these fantastic balance sheets, and nobody is really buying anything. With all the uncertainty they're facing with the economy and taxes, buying little companies is way down on their list.'"

Stupid, you can't read, can you? They aren't investing in anything. The investors are sitting on their money because the economy is so fucked they think they'll lose it on any risk. This causes the economy to stagnate with no jobs created and no revenue to enable the government to pay it's debts or even to meet it's obligations meaning it borrows even more money. Right now we're going down the hole at 100 billion dollars a month and no sign it's going to get better in the near term. It may not be a dis

Want to sit on a pile of cash? Fine. It won't be worth much come next year. Greece and Spain (and the US?) are too deep in debt? No problem. Pay your (fixed) obligations with tomorrow's devalued currency.

The problem is that the political landscape is being manipulated by people who have tons of cash and demand a risk-free guaranteed ROI. That's what caused the whole mortgage crisis. People with money went to Congress and then Goldman Sachs demanding some sort of paper that had zero risk and paid big interest. And Goldman's Morlocks went to work creating them for all the rich folks upstairs. But then someone blew the horn.

Sorry. No more free lunch. With return comes risk. Don't like it? Buy a mattress.

The solution is inflation? Scuse me but wtf are you smoking? Inflation screws everyone. Especially the poor and working poor.

Just about everything screws the poor the most. Even when you set out to screw the rich, the poor take it on the chin. The very last issue of the New York Times will read "World to End At Midnight. Poor and Minorities hardest hit."

With debt being the exception. If I owe you a dollar, the debt is an asset to you but a liability to me. Inflation reduces the purchasing power of the dollar I have to pay you back with, so it benefits the borrower. Likewise anyone with a mortgage, student loan, auto loan stands to benefit from inflation.

The question is who holds more debt? Is it the poor or the rich? And the answer isn't clear to me

Notice the Fed keeps inflation at a positive rate... When in the past 3-4 years it should have been negative. They instead pushed the peddle to the floor on inflation. Food/energy prices have nearly doubled. Yet wages have stagnated. Yet both of those are not counted in inflation yet are at the root of all goods sold in our country. It is because of the huge amount of debt the US gov has taken on. They want to erode that debt using inflation. But it can not be perceived as too high or you stall out investments.

Most 'rich' hold a significant amount of debt. It is how they finance huge projects with little risk to their own real assets (stock, bonds, land, metals, companies). They win by a landslide in how much they hold. For example Donald Trump. May look like an idiot (a persona I think he is grooming) but is a rather shrewd guy who has many huge loans out there. Has declared bankruptcy many times. To get creditors off his back. Yet he is still very rich...

Inflation is very real (and decently high at this point). My parents bought a house in 1970 for about 30k. That same house is now 'worth' 130k. My dads house payment was 130 bucks a month. Same payment today would be just shy of 800 a month.

Take a couple of macro classes and you will see how amazing 'leveraged' the whole world is.

The poor hold money - dollars. Those only go one direction during inflation: down.

But the poor don't hold dollars. They don't hold much of anything of value. They may own a house (that generally increases in value during inflation) and are promised social security benefits (where payments increase based on inflation). I don't see how the poor are punished almost at all by inflation. In fact it seems to help them.

Stagflation is worse, of course, but that isn't what anyone in this thread has been talking about.

I don't see how the poor are punished almost at all by inflation. In fact it seems to help them.

Low-end - heck, even most mid-range - wages rarely rise as much or as quickly as inflation.

The poor are punished more because they put the majority of their income towards survival, which increase in price (much) faster than their income. The middle classes can at least absorb price increases out of their discretionary expenses so they don't end up starving in the street.

That's the problem: you always want to spend other people's money, except, there's nothing to make people create wealth (start businesses, invest in startups and infrastructure, etc) to tax, and eventually, as Thatcher said, you run out of other people's money.

There is such a thing as society, and it paid for your roads, your schools, your prisons, your police force, your fire service, and it subsidises your hospitals, your water mains, your gas supplies, your reliable electricity supplies and the very fabric of civilisation you take for granted to start your business. Society is funded through taxes, and gives back in services and support (i.e. not in money) - it's an exchange of some income for the privileges living in a civilised country give you. Think on that next time you view yourself as a wealth creator and everyone working for the government as parasites.

It causes devaluation of cash. The only way to avoid it is to invest in something. And with the fed printing money (see QE, QE2, and QE3) we should be seeing it sometime in 2013. I'm hoping late 2013 or early 2014 but that doesn't seem realistic. Now with the type of QE they did, there is supposedly the option of undoing it somehow, but I'm a bit sceptical.

Why isn't it happening yet? My suspicion is that most of the money went nearly directly to the people who are hoarding it. If it's not circulating it ain't going to cause actual inflation. If this is correct, the Fed truely fucked up. A regulatory and tax climate that allows their last ditch effort to go straight into someones pot of gold would not only eliminate their ability to influence the economy, it would hand it over to someone else;-(

It's been said that US multinationals are holding over a trillion dollars in offshore cash. So if we do get some signs of inflation they may just go on a buying spree to the tune of a trillion dollars. Watch for inflation to start small and then spike - at least for prices of things huge companies like to buy.

It causes devaluation of cash. The only way to avoid it is to invest in something. And with the fed printing money (see QE, QE2, and QE3) we should be seeing it sometime in 2013. I'm hoping late 2013 or early 2014 but that doesn't seem realistic.

We should have seen it in 2010, based on the increase in money supply at that time. Why do you think 2013 will be the year?

The problem is that they're expecting a renewed recession when taxes go up and government spending goes down. The government will be taking more money out of the economy and putting less into it.

Anybody as freaked out by current government borrowing as you describe is simply being hysterical. Sure the deficit at a historical high in absolute terms, but its nowhere near a historical high as percent of GDP. On top of that the government is currently borrowing money at or below the rate of inflation. It'd be insane not to borrow when people are in effect *paying* us to hold onto it for them. Check out the recent ten year treasury rate [ycharts.com] and compare it to inflation [usinflatio...ulator.com].

No business would worry about borrowing money at an interest rate below what it can earn by holding onto the cash it already has. That's why *every* large business borrows money, even when it's profitable. It's counter-intuitive if you think of business and government budgeting like they were normal household budgeting, but business and governments aren't like typical private households. Even wealthy *individuals* borrow money when the interest rates are favorable. I once had a wealthy young trust fund kid working for me who borrowed money from the bank to buy a yacht. It made no sense for him to liquidate his investments when those investments earned more than the bank's interest rate.

There's a time to worry about government borrowing, and that's in a full economy where dollars in the private sector are creating jobs like crazy. Nobody seems to worry about austerity then, when interest rates are high, but they should. But when interest rates are low, suddenly people freak out about borrowing money. It's hysterical fear, that's all.

Well that works well for the handful of stinking rich fuckers out there. Unfortunately the biggest chunk of that capital is in investment funds made up of people's 401K and IRA retirement funds. Good stewards in charge of these funds hesitate to throw the money away as working people count on this money to enable them to buy food and pay their electric bills after they retire. I don't know if you have any such money set aside but I have almost a quarter of a million dollars in my 401K representing over 3

And you in turn seem to be a vacuous moron repeating the tired conservative talking points they've used for about 50 years.Meanwhile, in the fact-based universe, there isn't any evidence that raising taxes will tank the economy. Economic growth is strongest under Democratic presidents and their policies, and that's been true since FDR. The CBO recently studied the numbers and concluded there is no evidence that lowering taxes spurs the economy. What did the GOP do in response? Learn? Hell no, they suppresse

Much of the VC activity(and startup acquisition by larger outfits) in the valley has been based on absurd speculative bullshit only slightly less risible than pets.com. Now, with the supply of bigger suckers on which to unload your worthless stock in some 'disruptive' Web2.0/mobile/social/bullshit apparently drying up a bit, non-idiots are staying away.

It would probably be fairer to say that they are moving somewhere else, rather than drying up entirely.

From TFA ""Limited partners are getting fatigued from giving money to venture capital and getting back less than they give," said Tracy Lefteroff, global managing partner of the venture capital practice at PWC."

and

"Joe Dear, CalPERS' chief investment officer, told Reuters: "Venture has been the most disappointing asset class over the past 10 years as far as returns. ""

Suckers do sometimes catch on, eventually. This is unlikely to cure them in an absolute sense; but it makes it more likely that they will move to being suckers about some other flavor of asset.

The other thing that really gives me the 'yeah, it's a bubble that's starting to pop, go cry." feeling is the assertion that "So what's wrong with the VC industry? The problems are many and complex. But they can be boiled down to this: Not enough exits.".

You have an industry that is basically the tech-jockey equivalent of flipping houses with borrowed money. During the expansion phase of a bubble, that can work out rather well. At other times, you find yourself facing the tougher challenge of "actually producing houses people want to live in" and "living on the margins of a renovation contractor; because that's actually the only value you are adding".

The VC guys apparently aren't willing(or perhaps aren't capable) to build companies that actually make money, and earn their returns that way, and they apparently aren't capable of building companies attractive enough that firms with cash on hand would rather buy them out than just do it in house or do without. They've run out of suckers and apparently aren't good enough to cater to customers...

The other thing that really gives me the 'yeah, it's a bubble that's starting to pop, go cry." feeling is the assertion that "So what's wrong with the VC industry? The problems are many and complex. But they can be boiled down to this: Not enough exits.".

But I think you might go too far in your assertion that startups are useless (it sounds like are asserting that, anyway). Certainly the ones you find on "Start-Ups: Silicon Valley" are useless, but there are a lot of them that are good.

One thing's for sure though, this story has nothing to do with the 'fiscal cliff.'

I didn't intend to assert that startups are useless; just that if a VC can't make money by funding startups without a ready supply of 'exits', this suggests that the VC is doing a poor job of picking and cultivating startups that are either worth buying or capable of becoming profitable in their own right.

In theory, part of the value-add that a VC, rather than an ordinary loan, provides is some combination of expert judgement(so a good VC should theoretically be backing a better-than-average set of startups

I didn't intend to assert that startups are useless; just that if a VC can't make money by funding startups without a ready supply of 'exits', this suggests that the VC is doing a poor job of picking and cultivating startups that are either worth buying or capable of becoming profitable in their own right.

Good point.

If I am a company sitting on a big pile of cash, and there is the possibility that inflation or heavier taxation might strike, wouldn't I be rushing to turn my dollars(which are likely to be devalued or easy prey for the tax man) into products and patents and similar things that are less likely to suffer inflation and are much easier to value creatively when the IRS comes calling?

Taxes don't normally come on piles of cash........I think what they are really worried about is that the inflation or taxation will cause a recession. I was working with a startup in 2008 that had just hit profitability, and when the recession hit, all their customers dried up and the company closed. That's what you want to avoid.

For larger companies it's a different issue. Normally, for maximum value, a company will borrow money to fund normal operations, because it increases the return they

Two points: One, it's the end of the second tech bubble (in spite of those who have attempted to assure otherwise, we have had a tech bubble), and two, those 'piles of cash' corporations are supposedly 'sitting on' are priced in post-fiscal-cliff dollars, they aren't as much as they seem.

Starwars was a merger long over due.Netflix looks weak.AMD is in the wings.Just because google, apple, and microsoft aren't buying every month on doesnt mean a whole lot of fiscal uncertainty.It just means there isn't a real motivation to swoop in before your competitors beat you to the punch.It's good to take a break and take a breath in between spending 100 mil.Seriously if you need a idea to throw your money at.. how about flying cars that drive themselves with solar energy that let me connect with my fr

The funding game is dying, slowly. The future is in the 37 Signals and GitHubs of the world. (Both took funding I believe, but only after they were profitable : if the VC is how you keep the lights on, you're doing it wrong) Even more significant are the bootstrapped startups, the 1-4 person operations, that make great products that actually solve problems. (In other words, the anti-Instagram)

Could be worse. I just read a CNN story about a Vietnam Medal of Honor winner (posthumous of course). They couldn't even spell Khe Sahn correctly (spelled it Que Son). And that is one of the most famous battles of that war.

and is building a 12th. The are also a very long list of unneeded military weapon systems that are still funded and rampant corporate welfare. When conservatives want to talk about real fiscal responsibility and not just making the really rich richer than they might be able to say the words "financial cliff" without me laughing at their pure greed.

Or, here's a chart.
http://www.usfederalbudget.us/welfare_budget_2012_4.html
Looks like Defense is twice as big as the welfare budget.

It took me 2 minutes to actually look at the data. I guess the two trolls never bothered to look into their own positions. Shame.

While I'm at it... From Wikipedia

CBO's preliminary estimates indicate the federal government spent $3.54 trillion on a budget or cash basis during fiscal year (FY) 2012 or 22.6% GDP, down 1.6% vs. FY2011 spending of $3.60 trillion. Spending fell across all major categories except Social Security and Medicare.[20]

Yup, Obama is out of control! Face it, Republicans blow up the deficit, democrats fix it. Republicans whining about fiscal responsibility are lying. They're the ones that have blown up the federal deficit with stupid unneeded tax cuts and huge military expenditures. Look at a fancy graph of federal deficits against presidencies.... It's freak'in obvious. Conservatives hate facts...

"Fiscal uncertainty" isn't going to dissuade anyone from making a buck if it can be made.

And in real terms, in real, honest-to-god terms of providing good lives and good jobs for people right here in this country, I'm not all that sure that "venture capital" really means all that much. Oh, it means a lot to those who have it, and for a few minutes it means something to a handful of their pals, but if there is going to be a resurgence of innovation and growth in this country, it's not going to come from "venture capital". Because, as I said, if there's a buck to be made, even if taxes are high, people will line up to get it, regardless of the tax rates. Remember, this whole thing is over whether or not we're going to go back to the tax rates we had during the Clinton administration when everybody was making money.

There was venture capital in every hot and cold tap during the 90s, and all we got was this lousy popped bubble.

Real federal tax rates have never been lower for "venture capital". Is paying 14% really so onerous?

The whole "John Galt" story shows just how incapable of self-examination our economic elite have become. The notion that if the captains of industry are so important - such unique snowflakes - that if they were to disappear there wouldn't be a line of people ready and able to jump into that spot is such an example of ego run amok. But we already knew the egos of our financial elite have reached escape velocity that they believe they are worth yearly incomes of over 1000 times what the average worker is worth. What kind of self-regard does it take for someone to believe that?

Let's see how well their little tantrum works out for them.

Their money has already been on the sidelines. I'm guessing that we're in better shape to do without them than they are to do without us. Fuck 'em.

I'm guessing that we're in better shape to do without them than they are to do without us. Fuck 'em.

Have you ever genuinely tried started a company, and tried to ramp it up? Ever run into a situation where you need capital, and the only way you can succeed is either by taking loans or getting investors? Ever been in a situation where you've sold a lot of what you own for an idea you believe in, and really hope someone out there is willing to pitch in? Ever put in so much of your life into an idea that you'r

The more I read the article and follow the links, the more I think that having the Silicon Valley venture capital boys clutching their pearls and running to the fainting couches might be a really good thing for our country.

As much as they're trying to terrify us about this cliff, about the best thing that could happen to this country is if gridlock takes us right over the edge of the cliff. Taxes would go up... Spending would go down... the public would lose even more faith in our 2 political parties and maybe the military cuts would help us decide to pull troops out of at least a few of the hundreds of countries we have them stationed in.

Why the hell should the government make it certain for the VCs? This is free market, pal? Cant stand the heat? Get out of the kitchen.

We don't owe these VCs certain profits. You take the risk. If your bets come off, great, enjoy your fortune after paying the capital gains taxes. If the bet goes bad, cry me a river.

The sense of entitlement these businesses have is astounding. It is your money. Keep it under the mattress if you want. Fund startups at your own risk. Or enjoy it on a beach in Cayman islands. We live in a democracy. We change our House every two years. We change the White House every four years. We change the Senate every six years, 33% every two years. The winner makes new rules. Wanna play? Fine. Wanna take your ball and go home? Good riddance.

First, Silicon Valley sent the silicon (fabs) to Asia. Then, they outsourced labor to Asia. Then most start-ups needed an "Asian talent connection" (H1-B visa, India/China engineering, etc.) to get funding. Then,the VC set up offices in Asia. Now, those offices fund Asian start-ups. Asia is where the action is, and that is where the money is, too.

I go to occasional VC conferences in Silicon Valley, and get to hear what the VCs are doing. It's not looking good. The VC industry as a whole hasn't made money since 2001 or so. During the dot-com boom, many new venture funds were created, resulting in an influx of dumb money. Most of them haven't been profitable.

The problem is this. Before the dot-com boom, venture capitalists usually funded a startup which was going to make something. So they'd fund a few engineers for a few years, and about 1 time in 10, something good would come out that paid for the unsuccessful tries. This was a good business model and it drove Silicon Valley.

Dot-com startups weren't about technology. They were about marketing and market share. So they had to be funded beyond the R&D phase, well into the growth phase, before the winners and losers became clear. The loss per failure was much higher than when VCs were involved in technology startups.

This model has persisted in the post dot-com era and into the "Web 2.0" era. Most of the ideas one sees at VC meetings are minor variations on popular ideas. I've seen a presentation for a social network for cats. Some innovative technologies are proposed, but often they're not big wins.

About 1 in 10 VC-funded companies makes it big. 2 to 3 in 10 go bust. The rest end up in "zombie mode" - they generate enough cash to pay their expenses, but can't pay back their investors. A big headache in the VC industry is dealing with the growing army of zombies. They're more profitable alive than dead, so they're not killed off, but they're a net loss. There are a lot of half-dead "social" startups around. Tech startups tended to be sold off for the technology or shut down. That's what VCs mean by "lack of an exit".

You need the VC money to "get big fast". If you try to grow organically, you will get crushed by those with better judgement.

Think so? I've worked with a lot of VCs and I assure you that most of them would disagree with you. Most companies are not actually venture backed. Venture capital is only useful for companies with particular funding needs. A typical VC investment will be between $2 million up to maybe $50 million, have a 3-5 year investment horizon, and will be VERY expensive with the VC demanding 25%-60% of the company if not more. Most companies do not fit into the model for VC funding and in fact if you can avoid it you really do not want VC funding because the cost of capital is so extraordinarily high.

Venture Capital funding is just one of many avenues to fund a business. It is a form of Private Equity but not the only one and certainly not the only way to build a successful tech company. VC money is extremely expensive and VC backed companies demonstrably do not succeed at a higher rate than non-VC backed companies.

The origin of most of the cash glut recently isn't direct governent bail outs, most of it is due to the massive liquidity injections (a.k.a money printing) being done by the Fed, ECB and various other central banks. They are in a massive race to the bottom to see who can debase their currency faster, juice their exports, and print money to finance massive sovereign debts.

This money printing is mostly propping up the stock market and corporate profitability. It makes it look like all is well, though in reality the value of the dollars those things are measured in is plunging more than the stock market or corporate balance sheets are actually improving. It is a creating an economy based largely on fantasy, and is creating a global Wiemar Republic.

What the Fed is doing is also referred to as Financial repression. It is artificially suppressing interest rates, punishing savers, especially seniors who shun the stock market, and giving debtors, including the U.S. government a giant finance your debt for free card. China has been using massive financial repression for over a decade to juice their economy too.

When central banks start printing money to finance sovereign debt, it is nearly impossible for it to end well. The only question is when will the house of cards they are building collapse.

Every time Ron Paul started talking about this stuff on the campaign trail he got booed and everyone promptly stuck their hands over their ears and went "lalalalalalalalala............." I hope it holds together 3 more years so I can cash my 401K out before it's gone. A lifetime of savings and those fuckers are going to cheat me out of it. The sad thing is it's all the fault of the American people who only listen to what they want to hear. This two party shell game is going to end soon and the public wi

Companies are holding an inordinate amount of money because they don't want to spend it. If the Fed was really threatening the US with high inflation, why the heck would anyone hold cash reserves? You describe it in the next paragraph: Why would savers be punished while companies that are, in essence, saving, are not?

Also, if you really think that the government will debase the currency Weimar style, then you must expect very high inflation, at which point, you can happily purchase inflation indexed securities straight from the treasury. Why then, does the TIPS market project inflation under the Fed target for the forseeable future? Really, you could make a mint.

The issue here is probably that it is a misnomer to say corporations are holding "cash". The big banks (a.k.a. primary dealers) are moving their cash hordes around constantly but I think most of it has been in the stock market and commodities. I imagine most corporations are doing the same. You would have been a complete chump to actually hold cash for the last three years because the value of dollars have been hammered.

The key distinction is between holding your assets in liquid investments or investin

Those piles of cash the corps are sitting on is the bailout money that was handed out by the government. We wouldn't want it to get in the wrong hands now, would we? We gotta keep the squeeze on to reduce expectations. You can't justify all the coming austerity measures if the economy is all flush with cash. Abundance is poison...

Where are the '-1 outright lie' or '-1 willful ignorance' mods when you need them?

He said Asia/canada not EU. It is true that taxes are higher than in the US. But the overal cost is lower. Before coming back to Academia, I was part of a startup. With the health care support we have in Canada, as well as other benefits, the lower loaded cost of an employee about makes up for the taxes. He also said undertainty. A higher tax rate isn't what kills it, as Warren Buffet has pointed out time and again. Its the endless bickering and inability to settle on a solution that kills it. If the GOP in the house is willing to meet Obama part way, then the situation will improve.

f the GOP in the house is willing to meet Obama part way, then the situation will improve.

I don't see why. If the GOP meets Obama part way, Obama will just push the envelope even further, with carbon taxes and more economic tinkering. The problem is Obama's bad economic policies, a continuation of Bush's bad economic policies. No amount of compromise is going to fix that. And Romney wouldn't have been any better either. Our major presidential the last few times around have really sucked.

I don't see why. If the GOP meets Obama part way, Obama will just push the envelope even further,

And that, ladies and gentlemen, is the problem in a nutshell

The position here is -- If GOP were to ever compromise, even a little bit, they would show weakness and embolden Obama. So the solution is, clearly, to block everything and let the country burn.

One cannot negotiate when ANY compromise is considered an unacceptable sign of weakness. Can you come up with a reason why would Democrats just give up? It's not really a negotiation when one side is not willing to budge an inch, no matter what. The term for that is "throwing a tantrum"

Your view that doing nothing amounts to "letting the country burn" is itself a very left wing political view.

We do not have a left wing in US. We have a moderate-right wing and a far-far-right wing.

So from the point of view of his political opponents, stopping him at every turn isn't "letting the country burn", it is preventing legislation that would harm the country.

Republicans did manage to block a bill that would fund jobs for veterans on the reasoning that we have no money. Unless these Republicans voted against the wars (very few!), that makes them hypocritical to the extreme.

Obama can spend less, regulate less, withdraw the military, stop engaging in wars or drone strikes, and stop violating civil liberties all on his own without any help from Congress.

Congress is supposed to regulate war, actually. The only reason Obama goes on with wars/drone strikes is because Congress is staying out of it - uniformly so on both R-side and D-side.
Also, Obama cannot

Yeah, because taxes are SOOOOOooo much lower in Canada and the EU than in the U.S.

Well...actually, yeah in parts of Canada they are. And if the $7b in taxes goes through at the start of next year happen, I'm sure those of us up in Canada will see American companies flocking to Canada.

Yeah, because taxes are SOOOOOooo much lower in Canada and the EU than in the U.S.

Well...actually, yeah in parts of Canada they are. And if the $7b in taxes goes through at the start of next year happen, I'm sure those of us up in Canada will see American companies flocking to Canada.

You know, 7 billion in taxes is only about 200 bucks to each Californian. How much do you think it costs a company to move out of a state even? My guess is that for a small company it'd be on the order of tens-of thousands, without factoring in training costs and lost profits during the transition.

Canada top tax rate is 29%, vs 35% in the US (as of 2011). [investopedia.com] In California, home to a lot of VC-funded companies, high state taxes make this considerably worse. Also, Canadians get health care with their tax payments. In the US, we don't. The Canadian government and the governments in the provinces are more efficient, less corrupt, and much less anti-business than in the US. Your stereotypes about Canada and the US are out of date.

I hate these types of comparisons, personally, because I think they miss the bigger picture completely.

Part of the U.S.'s whole problem right now is the desire to patch things back up, post financial crash, to quickly promise people "it's not SO bad" and "We can soon get on with business as usual again!" Meanwhile, the real problems haven't been corrected at all, and we're just setting ourselves up for another, even bigger, fall, down the road.

Looks like you still do not get it. The cuts will not be "for a reason". Simply, there will be no money. I know, it's hard to imagine US government being out of money but this happened to many "great countries" of the past. Just ask Germans, or Russians, or Brits.I have lived through one of those moments. You apparently did not. There is no "reason", or "cause", or "justice". At that point it's only about "surviving". It's not pretty. Until then enjoy your ivory tower.

Getting people to believe that is the trick. It's not Republicans vs. Democrats, either. Both parties have spent more than incoming revenue (albeit on different things at times, and in different amounts).

Case in point: I work in Jefferson County, Alabama. It's bankrupt. (Literally. As in the largest municipal bankruptcy. Ever.) In spite of that, a few months back, the County Commission notes that there are condemned homes from the tornadoes of April 27, 2011. They declare

Does anyone else find it interesting, though, that there are serious posts talking about government punishing businesses for failing to invest in a risky environment, to rescue politicians from bad times?

Just since the election, the Republicans (or at least John Boehner) have offered, as a supposed compromise, that if the government gets more income from better economic circumstances, tax reforms, and cutting waste, the republicans will allow the government to some of that money. Since he has absolutely no pwere to stop the government from recieveing any income that comes from such sources, this is like me offereing to allow gravity to work normally, and then claiming I've made a good offer of compromise an

Beh. I'm a fiscal conservative, and to be honest unless you guys get your house in order there won't be much left. It's pretty interesting to watch from up here in Canada. Though never mind that the democrats idea of "cutting to balance" in that case was raising spending by 8%. Sorry the GOP had the right idea of blackballing the democrats on that one.

But hey, you've got all of a month and a half until the largest tax hike in history comes to fruition and kills the poorest economic recovery since the gr

The decline in VC spending did not start on November 7, and is not due to feverish fears of Obama. It dates to earlier this year at the latest, and is more related to spectacular flops in Bubble 2.0, stuff like Zynga's IPO going down in flames. It's not really Obama's fault that a lot of the tech bubble companies have no business plan.

Dude, he compromised so much on health-care that he literally passed the Republican health-care plan: it was almost identically the Heritage Foundation / Romneycare plan. As far as I can tell, it included virtually nothing of a Hillarycare-style, Democratic plan. So he basically compromised all the way to their side.

Turn off Fox. They're poisoning your mind, and stripping you of your ability to reason.

Corporations want the recession to continue. They make record profits during recession. They can use it as an excuse to lay off your coworkers, make you do the work of two people, and pay you less to boot. As if that's not enough, they tell you over and over that you must destroy your safety net and using the saving to cut their taxes, making things even better for them and even worse for you. They are conning you.

I'd like to refute your claims in greater detail, but the fact is that you haven't provided any details to refute. You're just insisting that Obamacare is somehow destroying the economy, but have you given any thought into how that could even be possible? No, of course not. The nice man on TV said so, and he said a bunch of other words that sounded smart, and he said them so confidently! It must be true!

You think corporate profits are going through the roof? Great! Buy some stock.

I did! I made a killing! The markets have done great under Obama. But unemployment stays high because our corporate masters like the fact that they can pressure people into working longer hours for less money. Why would they want to start hiring again when they're getting along just fine as is? And meanwhile the millionaires on Wall Street bitch and moan about how awful it is that they might soon have to pay 20% taxes instead of just 15%, and how we should get that money by taking food and medicine away from poor people instead.